The value of money Principles to be followed when charging for coaching services — Navgati

The value of money
Principles to be followed when charging for coaching services

Money is a touchy subject for many and the source of deep emotions, conflicts, anxieties and shame. It is a measure of status and power and when we speak numbers, judgments follow. The concept of the money taboo is a real one; when we have views about money but have no safe space to talk about it.

The question of how to charge for coaching services is one that comes up often in our coaching certification programs and the Coaches Collective (the community we have for folks who are practicing coaches and coaches in training).

The notes that follow are from a webinar conducted by ArunaGopakumar, the founder of Navgati on the ethics of charging. They are based on her work teaching and supervising therapists who are training in the field of Transactional Analysis and provided coaches with an opportunity to reflect on the psychological impact of how much and how fees are charged.

Why should I charge?

The idea of having to value oneself can be daunting, especially for coaches who are just getting started. They could undervalue their work or struggle with own sense of worth. Many coaches start by coaching people in their own circles and can find it difficult to even bring up the topic. Coaches could be worried about losing business if they ask for too much.

Whatever the coach’s resistance to charging may be, it gets manifested in how money is talked about or handled with the client (a coach not bringing up the fee until the client asks; feeling discomfort when stating a fee; stepping in to rescue the client when there is even the slightest sign of difficulty about the amount etc).

Perhaps the clearest and most honest argument for charging a fee is simply that, in most instances, the coach needs to earn a living, and that without the exchange of money for services ‘the whole relationship is removed from the real world’ (Freud, 1913/1958, p. 132).

There are also deeper reasons why it is important to charge clients for the work we do.
To continue quoting Freud, “It is a familiar fact that the value of treatment is not enhanced in the patient’s eyes if a very low fee is asked.” Not charging or charging a very low fee could also result in the coach feeling exploited by the client or feeling irritated if the client is non-responsive to the interventions.

When the fee is non-existent or low, there is nothing that holds either party accountable so could result in a lack of seriousness about the process. When people pay, their commitment to work and change is much higher than otherwise.

The final reason: A low fee could imply low value.A coach must decide the fee based on how they would like to be valued.

How much should I charge?

At the outset,there is no straightforward formula for deciding how much you want to charge because there are many factors including your personal value systems at play.

The factors to be considered when charging

• Expertise/training/qualification which in turn impact the value one brings to a client
• The psychological and monetary impact on the client
• Market conditions

There are factors that are equally important however we don’t always pay enough attention to them when deciding how much to charge:

• The coach’s own needs — Is the fee motivating enough?Is it sufficient for them to live their life?Does it cover the costs of providing the service (including the time and investment the coach has put into developing their skills)?
• How the coach values themselves
• Our own moral values about money/being of service/providing access to coaching

A very useful thumb rule (again from Freud) is that the fee should represent a sacrifice for the client, thus making it “difficult for the patient to relax into a passively dependent, infantile, help-seeking attitude”. A good fee is one where the client pauses to think about whether they really need this and what they are willing to commit to.

How we charge impacts how the community is perceived. Charging too low can hurt the community of coaches; that we all have a collective responsibility towards ensuring that coaching is valued as a profession, both in terms of the impact we have and in terms of what we communicate through our pricing. Charging too high can make the community elitist and excluding.

At the other end of the spectrum, the psychological impact of a very high fee

• The coach could feel valued and proud of being able to command that premium; could show up in her potency and confidence in the session
• This could also result in the coach feeling burdened — feels a pressure to perform and works harder than the client to bring change.
• It may not be sustainable from a client’s perspective; does not lend itself to long term work with clients
• Could result in the service not being accessible to all clients

Should I have a fixed fee or a variable one?

Setting one fee for all clients has the advantage of simplicity. It is also open and transparent. However, if fees areset and kept high, relative to the uneven distribution of income amongst different groups in society, then coaching, certainly in the private sector, becomes inaccessible to these groups.

Another way of looking at it is that if you run your business solely on one hourly rate, then many clients wouldn’t be able to afford working with you while a host of others might think you’re too inexpensive to be good at what you do.

Coaches often offer different rates based on the client’s ability to pay. However, it is important to differentiate between the ability to pay and willingness to pay. Several clients say they can’t but actually it is that they won’t. Coaches give discounts and may feel exploited when they see their clientsfreelypaying for other things.

The other downside of offering differential rates is that clients could feel obligated to you and claim success even when they have not achieved what they wanted. Also clients who are paying full price and then hear that you are giving a discounted rate to someone else could feel cheated.

The recommendation here is to fix a price for the target segment that you feel is appropriate (it’s ok to have differential rates for individual versus corporate clients for example) and then communicate your willingness to listen to how clients feel about that price.

Should you collect the payment in advance or post the session?

The advantage of this is that when paid in advance, the coach can relax and not have to worry about keeping track of and following up on payments. It also helps clients recognize the long-term nature of the work. However, it could have two downsides

• It may mean a big initial payout for the client which is a deterrent.
• Some clients may experience guilt(Should I spend so much on myself?) or anxiety (Will I get my money back if it doesn’t work?) when they have to pay a bulk amount upfront

When should you communicate the fee?

The unequivocal answer to this is before you start work. It is important that people don’t share personal material with you till the fee is discussed. Otherwise the client may feel vulnerable/anxious if she cannot afford the coaching and is left with the feeling that the coach knows something about her that she wouldn’t have otherwise shared.

Fees and conditions around payment must be shared before starting work. Negotiations should be concluded by having reached a client agreement before the client incurs any commitment or liability of any kind.

Should I offer the first session free?

While not unethical or illegal, offering the first session free may trap some clients into coaching. There is a danger that clients will be “low-balled,” or attracted by the free session, only to be pressured subtly into continuing with the coach. After revealing intimate details to a stranger, they may feel reluctant to accept a transfer to a new coach. If coaches are alert to this potential pitfall and keep the clients’ needs primary, this practice is acceptable.

So overall, while there are no absolute answers, coaches need to pay attention to the psychological impact of pricing contacts on both sides of the equation and price their work such that they meet their needs; am true to the client and the client can afford it.

Ethics of charging

This section provides a framework that coaches can use to make difficult decision with respect to pricing. The ICF has clear recommendations on ethical practices for all ICF coaches (read here for more information — https://coachingfederation.org/ethics/code-of-ethics).

The International Transactional Analysts Association (an international non-profit organisation whose purpose is to help advance the theory, methods and principles of transactional analysis) deepens this awareness of ethics through an ethics grid.

The ethics referred to are a set of values taken from the UN declaration of human rights, converted into principles that we can check our decisions against. The five values are

1. Respect — Showing politeness, honor and care to all; not putting another down; honoring differences, accepting another’s being unconditionally, listening and being present to another
2. Empowerment — Having the authority, skills, information and confidence to act; feeling in charge of own life (owning our agency); offering others authority, skills and information and trusting their capacity to think for themselves (recognizing another’s agency and autonomy
3. Protection — Keeping safe from loss, harm or injury
4. Responsibility — Taking accountability for outcomes for something that is your job or duty to deal with, using power to empower and protect others
5. Commitment — Putting the effort, time and energy needed in the relationship, defining and accepting responsibilities and boundaries

All of these apply to all the stakeholders involved

• The coach themselves
• The client
• The coaching community
• The sponsor

Put these two together and you get the ethics grid (see diagram A below). The way to work with it is to first formulate a clear question on a pricing challenge you are facing as a coach. Some examples could be

• Should I reduce the fee for a client because the financial load on them is high?
• What should I do with a client who repeatedly cancels just before the 24 hour window for which a cancellation fee applies?

Once you have your question sharply defined, then ask yourself, for each stakeholder, which value would you be upholding if you made the decision one way? What value would you be letting go of if you made the decision another way?

Remember that everything is with respect to you and your view of the situation, since you can’t speak for the other.Trust your gut, it isn’t so much a thought process as an alignment and congruity in your body. It is an iterative process, layered like peeling anonion.

Diagram A

For more information about our ICF accredited coach training programs, visit https://www.navgati.in/icf-accredited-coach-training/ For more information about our Transactional Analysis training programs, visit https://www.navgati.in/transactional-analysis-programs/

Originally published at https://www.navgati.in on May 10, 2022.